The Hawaiian vacation tab has arrived for nine online travel companies, and it’s a big one.
The companies, including Travelocity, Expedia, Orbitz and Priceline, owe the state of Hawaii $53.1 million in general excise taxes, penalties and interest, the state Tax Appeal Court ruled.
The Hawaii Supreme Court ruled last March that the online travel companies owed back taxes for selling Hawaii hotel rooms over the Internet. The decision regarding just how much they owe was announced Wednesday by the state Attorney General’s Office.
“Online travel companies derive substantial profits from the sale of hotel rooms, rental cars and other services in Hawaii,” Attorney General Douglas Chin said in a press release. “The importance of the Hawaii Supreme Court ruling is the precedent it establishes. People or companies who provide goods and services through the Internet that are used or consumed in Hawaii are subject to Hawaii taxation, despite being domiciled in other states.”
In the ruling last March, the Supreme Court said the companies are subject to Hawaii’s general excise tax, but concluded that they are taxable only on their net receipts from the sale of hotel rooms in Hawaii, not their gross receipts.
“Litigation against the companies for their other State tax obligations for their other business activities in Hawaii during the period 2000 through 2013 is continuing,” Chin said in the release.
When online travel companies book Hawaii hotel rooms, they must pay the state’s general excise tax.
Cory Lum/Civil Beat
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